Maryland’s Supreme Court declined to overturn the strict privity rule in legal malpractice cases. The rule, which generally bars third parties from suing lawyers, was a key issue in the recent Bennett v. Gentile decision.
Bennett is a legal malpractice case that began when the defendant-attorney was retained to prepare estate planning documents for plaintiff’s mother, Pauline Bennett, in 2015. Bennett v. Gentile, 2024 Md. LEXIS 305, *4 (Aug. 12, 2024). The defendant-attorney prepared various documents, including those relating to a trust, which were revised in 2017. Id. at *4, 6. Disputes arose between family members in 2019, and the defendant-attorney was asked to prepare a new trust instrument which substantially changed certain portions of the original document. Id. at *7-8. More specifically, the new trust document was altered so that plaintiff was the sole beneficiary of a certain piece of property and a granddaughter was removed as a beneficiary and successor trustee. Id. at *8. Pauline died in late-2019 and the plaintiff became the successor trustee of her trust. Another dispute arose between plaintiff and her daughter over the piece of property and litigation ensued. Ultimately, Plaintiff asserted claims against the defendant-attorney as part of the litigation, including that the attorney was negligent in drafting the trust documents. Id. at *10. Plaintiff made the claims against the defendant-attorney individually and as trustee. Id. at *11. The trial court ruled in favor of the defendant-attorney and plaintiff appealed, asking Maryland’s Supreme Court to expand the rule of strict-privity that generally bars third parties from suing attorneys. Id. at *11-12
On appeal, the Supreme Court rejected plaintiff’s request to jettison the rule of strict privity in favor of a broader “balancing of factors” approach articulated in Lucas v. Hamm, 56 Cal. 2d 583, 15 Cal. Rptr. 821, 364 P.2d 685 (1961). The Supreme Court relied on a number of cases, including Wlodarek v. Thrift, 178, Md. 453, 13 A.2d 774 (1940), Flaherty v. Weinberg, 303 Md. 116, 492 A.2d 618 (1985), and Noble v. Bruce, 349 Md. 730, 709 A.2d 1264 (1998), to hold that plaintiff had not demonstrated a significant change in the law that would justify discarding the rule of strict privity. Id. at *18-21. The Supreme Court also addressed the third-party beneficiary exception to the strict privity rule and reaffirmed that in order to claim third-party beneficiary status, a plaintiff would have to demonstrate that “the intent of the client to benefit the non-client was a direct purpose of the transaction or relationship.” Id. at *33 (citations and quotation marks omitted). Because plaintiff could not demonstrate this, the Supreme Court affirmed the trial court’s rulings in favor of the defendant-attorney. In terms of a takeaway, when entering into an engagement, practitioners need to be mindful of delineating who the client is so that the argument cannot be made that the intent of the representation was to somehow benefit a third party.
George Mahaffey advises and defends a wide variety of clients in professional liability matters. He handles ethics-related matters on behalf of accountants, attorneys, engineers, design professionals, and financial services and insurance professionals.
Goodell DeVries defends various professionals in Maryland, the District of Columbia, and Virginia, including lawyers and law firms. Many of these cases are ethics matters involving Bar Counsel. If you have questions about the above or are a Maryland lawyer facing discipline, please contact us at EthicsHelp@gdldlaw.com.
